Definition and Basics of Cost Liability
Die Cost Liability is a central legal principle relating to the obligation to assume costs in connection with a specific legal relationship or transaction. It arises particularly in judicial and extrajudicial contexts and governs who must bear the expenses incurred by a proceeding or other measure. It serves to allocate the burden of costs during the implementation of legal processes, measures, contracts, or public procedures.
Systematic Classification of Cost Liability
Cost Liability in Civil Law
In civil law, cost liability is particularly significant in relation to court proceedings but also plays a role in contract law. Central provisions are found in the Code of Civil Procedure (ZPO), especially §§ 91 et seq. ZPO, which govern the principles of cost reimbursement between the parties. Cost liability in civil proceedings depends on the extent to which a party prevails or is defeated in the process.
Principle of Cost Reimbursement after Prevailing and Losing
According to § 91 para. 1 ZPO, as a rule, the losing party must bear the costs of the legal dispute. This includes both court costs and the necessary expenses of the prevailing party. Components of cost reimbursement include, among others:
- Court costs (fees, expenses)
- Extrajudicial costs (e.g. legal fees, expert fees)
- Travel expenses and other necessary outlays
In the case of partial victory, the costs must be apportioned proportionally (cf. § 92 ZPO).
Exceptional Cases and Special Provisions
Special situations regarding cost liability arise, in particular, in the event of withdrawal of action, settlements (§ 98 ZPO), third-party notice (§§ 74 et seq. ZPO), or in cases of non-genuine joinder of parties (§§ 59 et seq. ZPO). Furthermore, the parties may agree to a different allocation of cost liability (“cost agreement”).
Cost Liability in Administrative Law
In administrative law, cost liability and cost reimbursement are determined primarily by the provisions of the Administrative Procedure Act (VwVfG) and the Administrative Court Code (VwGO). Here as well, cost liability in judicial proceedings generally follows the outcome, depending on which party prevails or loses. In addition, the individual administrative cost regulations (e.g., fee schedules, state administrative cost laws) apply.
Cost Liability in Criminal Law
In criminal proceedings, cost liability is governed particularly by §§ 464 et seq. Code of Criminal Procedure (StPO). In the event of an acquittal, the state treasury usually bears the necessary expenses of the defendant. In the case of a conviction, the convicted person is obliged to bear the costs of the proceedings to the extent caused by their conviction.
Cost Liability in Insolvency Law
Cost liability also plays a significant role in insolvency law. The Insolvency Code (InsO) stipulates that the costs of insolvency proceedings are to be paid primarily from the insolvency estate (§§ 53, 54 InsO). If the estate is insufficient, the applicants or members of the management may be liable to a certain extent, especially in cases of deferred proceedings costs (§§ 4a et seq. InsO).
Legal Foundations of Cost Liability
Statutory Provisions
The most important statutory foundations for cost liability include, among others:
- Code of Civil Procedure (ZPO), §§ 91 et seq.
- Administrative Court Code (VwGO), §§ 154 et seq.
- Code of Criminal Procedure (StPO), §§ 464 et seq.
- Insolvency Code (InsO), §§ 53 et seq.
- Administrative Procedure Act (VwVfG)
- Court Costs Acts (GKG, FamGKG, etc.)
The respective special statutory cost provisions are relevant, for example in family law or labor law, as well as in supplementary cost-related acts.
Contractual Arrangements
In addition to statutory regulations, clauses on cost liability can also be expressly stipulated by contract, for example in service contracts, contracts for work and services, or management agreements. The contractual allocation of costs is generally permissible unless it is excluded by law or limited by mandatory provisions.
Distinction: Cost Liability, Cost Reimbursement, and Bearing of Costs
The term ‘cost liability’ must be clearly distinguished from cost reimbursement and bearing of costs:
- Cost Liability refers to the legal obligation to pay costs to third parties or the public authorities.
- Cost Reimbursement means the repayment of previously advanced costs to the entitled party.
- Bearing of Costs generally describes who has to assume the costs, without necessarily entailing a liability obligation.
Cost liability typically follows a successful claim by the creditor (e.g. the court or the prevailing party).
Scope of Cost Liability
Substantive Scope
Cost liability generally covers all necessary costs incurred by the proceeding, measure, or legal relationship. These include:
- Court costs and administrative fees
- Expert and witness costs
- Attorney fees and other representative costs
- Service of process and travel expenses
- Administrative or enforcement costs
Damages or expenses not directly related to the proceeding are not considered reimbursable costs.
Personal Scope of Liability
Cost liability can extend both to parties involved in the proceeding and to third parties, such as participants in third-party proceedings. Depending on the legal field and the individual case, liability may be joint, several, or apportioned.
Special Cases and Individual Instances of Cost Liability
Cost Liability for Extrajudicial Measures
Cost liability can also arise outside formal proceedings, for example in substitute actions by authorities, precautionary measures, or within extrajudicial dispute resolution. Here, special laws refer to the rules on cost liability.
Cost Liability in the Event of Abusive Legal Proceedings
In individual cases of abusive or bad-faith exercise of rights, unfounded or frivolous claims, cost liability may be intensified (e.g. by imposing penalty costs) or modified.
Significance and Practical Relevance
Cost liability is a central component of procedural and procedural law regulations. It serves to fairly allocate the economic risks of a process or administrative procedure and to avoid unjustified burdens on legal transactions. Its proper application is highly relevant for litigation, cost risk, and the efficiency of legal enforcement.
Literature and Further References
- Zöller, Code of Civil Procedure (Commentary)
- Hartmann, Cost Laws (Commentary)
- Thomas/Putzo, ZPO
- Meyer-Goßner/Schmitt, StPO
- Administrative Court Code (VwGO), Commentaries
This article provides a comprehensive overview of cost liability, its legal structure, and its significance in various areas of law. In each individual case, the relevant provisions of the respective field and court decisions must be considered.
Frequently Asked Questions
Who generally bears the costs in the event of a legal dispute?
In civil proceedings, the so-called ‘cost causer principle’ generally applies. This means: the party that loses in court must bear the costs of the legal dispute (§ 91 ZPO). This includes court costs as well as the costs of the opposing attorney, to the extent that they are reimbursable. If each party has partially won and partially lost, costs are apportioned. In out-of-court disputes, liability is determined by statutory provisions, particularly § 280 BGB (contract) or § 823 BGB (tort). In employment law, particularly in the first instance, each party generally bears its own attorney’s fees, regardless of the outcome of the proceedings.
Can a party claim full reimbursement of extrajudicial costs incurred?
Extrajudicial costs—including, in particular, attorney fees incurred before the filing of a lawsuit—are only reimbursable if they were necessary and appropriate and have a direct connection with the subsequent legal action. A claim for reimbursement may arise from § 280 BGB (for culpable breach of contract) or as so-called default damages (§ 286 BGB). However, case law requires that retaining an attorney was necessary for the appropriate legal pursuit. Whether the opponent must bear these costs thus depends on whether they were already in default or had committed a breach of duty, and whether retaining an attorney was necessary.
Are multiple joint and several debtors jointly liable for costs, and how is liability apportioned among them?
According to §§ 421 et seq. BGB, multiple joint and several debtors are generally jointly and severally liable for costs. This means the creditor can claim the full amount from any debtor; any amounts paid are settled internally among the debtors according to § 426 BGB. The internal apportionment of liability is determined either by contractual agreement or, in the absence of such, by the circumstances of the individual case, usually in equal shares. For litigation costs, special procedural provisions may also apply, such as the handling of co-litigants according to § 100 et seq. ZPO.
What is the significance of a cost decision in a judgment and how is it enforced?
The cost decision of a judgment determines conclusively which party must bear what portion of the litigation costs (§§ 103 et seq. ZPO). These costs are calculated by the court in the so-called cost assessment procedure on the basis of a cost assessment application. The cost assessment order constitutes an enforceable title. Thus, the party entitled can initiate enforcement measures if the opposing party does not pay voluntarily. As a rule, the cost decision follows the court’s final decision, but may be challenged independently by immediate appeal.
Are witnesses and experts also subject to cost liability?
Witnesses and experts are generally not liable for the costs of a proceeding unless grossly negligent or intentional misconduct can be proven (e.g. wilful false testimony or refusal to testify without lawful excuse). In such cases, the court may impose the costs of their appearance or caused delay on them (§§ 380, 409, 414 ZPO). Otherwise, witnesses and experts have a statutory right to reimbursement of their expenses and compensation under the Judicial Remuneration and Compensation Act (JVEG).
What special provisions apply to cost liability in court order for payment (default judgment) procedures?
In order for payment (default judgment) procedures, the applicant initially advances the costs incurred by the application and judicial processing. In the event of an objection and the resulting transfer to contentious proceedings, these costs become part of the litigation costs and are subject to the subsequent judgment’s cost decision. If there is no objection and the enforcement order becomes final, the opponent must bear the full costs. Expenses for initiating the order for payment—including court fees and necessary attorney fees—are reimbursable as soon as a substantive right to reimbursement exists.
